Ken Kacenga, a 65-year-old doctor in Sierra Vista, Ariz., who plans to retire later this year, got hit with a 23% premium increase recently on the long-term-care insurance he and his wife bought several years ago. The couple struggled with whether to drop the coverage, he says, before finally deciding to keep it for another year while shopping around for other options.

"My fear is…it could become unaffordable as I get into the fixed-income stage of my life," Dr. Kacenga says.

Costs vary widely, even for coverage that is basically identical, according to a March study by the long-term-care insurance group. For example, a $150 daily benefit, lasting three years for a married couple aged 65 in "standard" health, ranges in price from $3,815 a year to $7,129.

A decade ago, the conventional advice was to spring for unlimited lifetime coverage. That option has become so expensive and so unpredictable for insurers that some have dropped it altogether. Instead, for most people, it is best to choose a "short and fat" policy, with fewer years' coverage and a larger daily benefit. Most people buy three years' coverage, as the average nursing-home stay lasts about that long—though that could follow years of other care.

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I think most well-to-do retirees could probably fund 2 or 3 years in a nursing home themselves. The bankruptcy scenario would be an otherwise healthy spouse spending 10 or 20 years in an Alzheimer's facility. If an insurer won't protect you against that, there's little reason to let them suck away a good portion of your wealth in catastrophically escalating premiums.